SEC Chair Hangs Ethereum ETF in Balance; Here’s Why

The journey toward approving an Ethereum ETF stands on shaky ground when compared to the recent launch of Bitcoin ETF. While the BTC ETF launch took nearly a debate and a few lawsuits, SEC Chair Gary Gensler never called Bitcoin anything other than a commodity.

 But, Gensler weighs caution on how he defines Ethereum.

When Gensler deemed Bitcoin a non-security commodity, it became akin to gold and silver. But Ethereum’s classification remained ambiguous, clouding the prospects for its own ETF.

Bitcoin is a loner among its peers

In a recent interview with CNBC, Gensler’s comments have set a precedent for the market once again by recognizing Bitcoin as the lone crypto commodity, suggesting that an Ethereum ETF may face tougher scrutiny.

He stated, “What we did this week… it’s happened to one non-security commodity token called Bitcoin,” positioning Bitcoin as unique among its peers.

Gensler added, “Like we’ve had gold spot exchange-traded products and silver exchange-traded products in the past and approved in the past.”

This clarification comes amidst the SEC’s rigorous debate on what is deemed a security. It is especially highlighted by the Ripple case, with several community arguments partly resting on Ethereum’s status.

ETH ETF approval odds lower than BTC

Gensler’s careful language suggests that the SEC is not ready to categorically separate Ethereum from the potential label of a security, which would require all its transactions to be either registered or exempt from registration.

While Gensler has openly categorized Bitcoin as a commodity, his reluctance to speak on individual tokens like Ethereum signals complexity. This ambiguity could cast a shadow on the expectations for an Ethereum ETF by May.

Bloomberg’s senior ETF analyst, Eric Balchunas, reportedly places a 70% chance of approval by May for the ETH ETF. It is a dip from the more favorable odds given to Bitcoin at 90%.

Upcoming deadlines in 2024

The list of Ethereum ETF proposals awaiting SEC decisions this year calls for clarity sooner. VanEck and ARK 21Shares have proposed ETFs backed by physical Ethereum, with custodianship potentially involving major players like Gemini and Coinbase. The SEC’s final decisions are due by May 2024.

Hashdex and Grayscale are taking their offerings to NASDAQ and NYSE respectively, with decisions expected by the first half of 2024. Grayscale, in particular, has a significant deadline in June 2024 for its Ethereum Trust Conversion.

Invesco Galaxy and Fidelity are in the race with final decisions anticipated in July or August 2024. BlackRock has thrown its hat into the ring with an ETF under Nasdaq’s umbrella, hoping for a decision by early August 2024.

 Also Read: Bitcoin ETF Surge: Day Two Saw Spot Bitcoin Funds Flourish